Wall Street Futures Flat, Dollar Gains; China Nears 9-Month High on Stimulus Bet
New York (Mar 6) Wall Street futures sputtered for a second consecutive session Wednesday, as global stocks held near multi-month highs as investors discounted fresh stimulus in China against weaker world growth forecasts from the OECD.
China's plans to pump around $300 billion into fresh spending and tax cuts, as well as the prospect of a comprehensive trade deal with the United States, has taken stocks in the world's second largest economy to nine month highs, but hasn't lifted broader equities this week as investors hold on to recent gains ahead of key jobs data later this week in the United States, an ECB rate-setting meeting tomorrow in Frankfurt and next week's potentially decisive Brexit votes in London.
Against that backdrop, investors were also presented with a reduced outlook from the The Organisation for Economic Co-Operation & Development, which sees global GDP advancing 3.3% this year and 3.4% in 2020, forecasts which clip 0.2 and 0.1 percentage points respectively from the group's prior estimate.
"Economic prospects are now weaker in nearly all G20 countries than previously anticipated," the OECD said. "Vulnerabilities stemming from China and the weakening European economy, combined with a slowdown in trade and global manufacturing, high policy uncertainty and risks in financial markets, could undermine strong and sustainable medium-term growth worldwide."
Wall Street futures were largely unmoved by the report, however, with U.S. investors remaining focused on the strength of the domestic job market, which continues to outperform despite suggestions of a broader slowdown, and the impact that will have on Federal Reserve rate policy.
Contracts tied to the Dow Jones Industrial Average are indicating an 18.6 point opening bell decline while those linked to the S&P 500 , which has added 11.4% since New Year's Day, are suggesting a 2.15 point pullback for the broader benchmark.
European stocks were similarly nonplussed by both the China stimulus reports and the OECD downgrade, with markets trading cautiously ahead of tomorrow's ECB rate decision in Frankfurt, where the central bank is expected to reveal a fresh lending package for the region's banks in order to stoke lending growth and arrest any pullback in inflation prospects, which have concerned policy makers for several months.
General Electric (GE) shares extended declines in pre-market trading following yesterday's comments from CEO Larry Culp, who told a conference in New York that free cash flow from the conglomerate's industrial division is likely to remain negative this year but insisted the troubled group would accelerate its ongoing restructuring plan.
BJ's Wholesale Club Inc. (BJ) shares were another early market mover, rising 1.4% and it posted stronger-than-expected fourth quarter earnings and issued firm 2019 guidance as U.S. retailers continue to outpace Wall Street estimates from the holiday period.
The Stoxx Europe 600 was little-changed by mid-day in Frankfurt, but is holding near four-month highs, while Britain's FTSE 100 was marked 0.2% higher in London as the pound retreated to 1.3141 ahead of next week's vote in Parliament on Theresa May's oft-delayed Brexit deal.
Global oil prices were also on the back foot, thanks in part to data from the American Petroleum Institute late Tuesday which showed domestic crude stockpiles rose by a much larger-than-expected 7.2 million barrels last week.
Brent crude contracts for May delivery, the global benchmark, were marked 1 cents lower from their Tuesday close and changing hands at $65.83 per barrel while WTI contracts for April were seen 39 cents lower at $56.17 per barrel.
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